Foreign Stocks: Trade is major driver.

Optimism over global trade and US/China relations at the G20 Summit in Argentina aided emerging markets performance. Europe continued to struggle with Brexit and other geopolitical uncertainty.

Fixed Income: Hard-hit corporate bonds.

Investment-grade US corporate debt is on pace for its worst year since 2008. Concerns over increased corporate leverage, falling credit quality, and weakness in the energy sector are contributing factors.

Real Assets: Oil prices slide.

Oil finished at its lowest price in more than a year on a weakening global growth outlook and a related production surplus. Real estate markets in many major US cities continued to soften.

Alternatives: Value in illiquid credit.

While the public bond markets are under pressure, we see potential value in private sector debt that is illiquid for investors able to maintain investments with longer holding periods.

Equities Total Return

NOV

YTD

1 YR

U.S. Large Cap

2.0%

5.1%

6.3%

U.S. Small Cap

1.6%

1.0%

0.6%

U.S. Growth

1.1%

7.4%

8.1%

U.S. Value

2.9%

3.1%

2.6%

Int’l Developed

(0.1%)

(9.4%)

(7.9%)

Emerging Markets

4.1%

(12.2%)

(9.1%)

Fixed Income Total Return

NOV

YTD

1 YR

Taxable

U.S. Agg. Bond

0.6%

(1.8%)

(1.3%)

TIPS

0.5%

(1.8%)

(0.9%)

U.S. High Yield

(0.9%)

(0.1%)

0.2%

Int’l Developed

0.1%

(3.6%)

(3.7%)

Emerging Markets

2.9%

(2.7%)

(1.4%)

Tax-Exempt

Intermediate Munis

0.9%

0.8%

1.2%

Munis Broad Mkt

1.1%

(0.1%)

0.9%

Non-Traditional Assets Total Return

NOV

YTD

1 YR

Commodities

(0.6%)

(4.7%)

(1.8%)

REITs

4.8%

4.2%

3.9%

Hedge Funds

Absolute Return

(0.4%)

0.5%

0.8%

Overall HF Market

(0.6%)

(4.9%)

(4.2%)

Managed Futures

(1.1%)

(7.2%)

(6.5%)

Economic Indicators

NOV-18

MAY-18

NOV-17

Equity Volatility

18.1

15.4

11.3

Implied Inflation

2.0%

2.1%

1.9%

Gold Spot $/OZ

$1223

$1299

$1275

Oil ($/BBL)

$59

$78

$64

U.S. Dollar Index

91.6

88.7

89.2

Our Take

We have been saying for some time that we anticipate China and the US will come to some sort of resolution when it comes to the trade war. That said, the recent 90-day truce reached between Trump and Xi at the G20 Summit, while a positive development, is on its face a stop-gap solution. In any case, the truce does create a timeline for negotiations and for compromise, which we believe is clearly in the interest of both parties.

LNWM portfolios remain positioned for continued global growth and are likely to benefit should investor confidence and risk appetite remain in place. US equity performance since the end of September has been more volatile and net negative in balance. As we look forward, we remain convinced that portfolios will capture additional return in this cycle and do not anticipate making dramatic changes as we head into 2019. It is likely, though, that we will look to reduce risk at the margins while continuing to emphasize asset classes that tend to perform well during the late stages of economic cycles, such as commodities.

In fixed income, there remains great uncertainty about the path of interest rates despite the Federal Reserve telegraphing fewer rate increases in 2019. We remain invested in strategies that have a flexible approach to both interest rate risk and credit risk.